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AUD/USD Forecast: Australian Dollar Rally Overextended?

Australian Dollar Technical Forecast – Neutral

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The Australian Dollar closed out the first week of November with an impressive showing, as a risk-on mood swept through markets. AUD/USD price action rallied 3.25%, engulfing the entire October range. Friday saw a small retracement to close out the week, but intraday price action found support near October’s closing high at 0.7239.

AUD/USD – Daily Price Chart

AUD/USD Chart

Chart created with TradingView

Bulls will look to defend that level of support again. To the upside, momentum may have already been exhausted. And given the velocity in the move higher, bullish bets on the trade could quickly unwind if a break to the downside forms. The 100-day moving average (0.7130), which also coincides closely with prior resistance seen through late October could offer the next level of support.

Consequently, AUD/USD could likely remain rangebound for the time being, or perhaps shift back into October’s trading range. The latter wouldn’t necessarily signal a bearish shift in the longer term price trend from the March low. It would likely reduce any interests from prospective bulls until a solid base of consolidation forms.

Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, follow @FxWestwater